Qualified Assignments Can Now Be Applied to Workers�
Compensation Claim Settlements

What this change means:

For years, the Internal Revenue Code Section 130 has provided for physical
injury liability structured settlements to be assigned with a Qualified
Assignment. This means that the defendant (or its liability insurance
company) may assign the promise to make the future payments to a third
party by means of a "qualified assignment." The assignment company assumes
the responsibility of issuing checks, may purchase an annuity or Treasury
Bond to fund its liability and is often backed by a financially strong
parent or sister company, providing additional financial security to the
injured person. With the signing of the Balanced Budget Act of 1997, IRC
130 is amended and expanded so that employers or their insurance companies
now have the option of using Qualified Assignments in workers� compensation
settlements and not just physical injury liability claims.

Workers Compensation claim settlements will still have to be approved
by the Industrial Commission, Court, ALJ or other entity that approves
workers� compensation settlements in each state.

This bill is prospective. It applies only to work injuries occurring
after the date the bill was signed (August 5, 1997).

In many states, the applicable regulatory body (Industrial Commission,
Court, ALJ, etc.) currently requires that the employer own and guarantee
the annuity. Those specific regulatory bodies will have to determine if
they will accept in the future the use of Qualified Assignment as outlined
in the amended IRC 130.

This change will allow self-insured employers to settle workers� compensation
claims with a structured settlement and completely remove the liability
from their balance sheet.

With this change, injured employees can settle their claim and receive
a level of financial security that will often be greater than that offered
by their employer.

If you have any questions or want more information, please call Susan
Mease at 1-800-447-1153.